Troubled UK property services group Countrywide has announced a £90 mln (€100 mln) recapitalisation by Alchemy Partners, a private equity company that specialises in investing in distressed and undervalued or underperforming businesses.
In a trading statement issued on Thursday, Countrywide said it is receiving the investment in return for a streamlined board including the removal of chairman Peter Long, and a new chief executive officer instead of Paul Creffield.
The investment is conditional upon consent from a meeting of Countrywide’s shareholders to be held shortly. ‘The Board believes that the Alchemy proposal provides the greatest certainty for the Company's future and a clear route forward for the business and is in the best interests of Shareholders as a whole,’ the company said in a statement.
Approval for the operation might however get tricky as Catalist Partners, one of the company’s largest shareholders, said in response to the announcement that it ‘strongly opposes’ what it deems as an ‘unnecessary, ill-judged and dilutive transaction’.
‘While clearly a very attractive deal for Alchemy, it is destructive for shareholders and only serves to fund the continuation of a flawed “back to basics” business plan,’ Catalist said.
Proceeds of the investment would be used to pay off some of the company’s existing debts.
Alchemy will hold between approximately 50.1 and 67.7% of the newly-enlarged share capital of the firm, depending on the results of an open offer and tender offer contained in the capitalisation proposals.
The new chairman of Countrywide is to be Carl Leaver, who will join the board at the end of the capitalisation process. The new CEO is to be named before the end of the year.
In the statement, the company admits it is at ‘a critical inflection point’ and ‘in urgent need of recapitalisation’ to reduce its net debt and lessen its exposure to lenders.
Leaver, formerly head of digital activities at Marks & Spencer, said: ‘With the right capital structure and Alchemy as a supportive controlling shareholder, I am confident that there is a very bright future for Countrywide. I look forward to helping to harness the capability of the Countrywide team to deliver for customers and, ultimately, creating value for shareholders.’